$75 million proposal could lure Kings here

DeMarcus Cousins #15 of the Sacramento Kings brings the ball up the floor during a game in February. MIKE EHRMANN, GETTY IMAGES

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Fireworks erupt above Honda Center in June 2007, after the Ducks' Stanley Cup victory. City officials have said the arena always was built for two professional teams. JOSHUA SUDOCK, THE ORANGE COUNTY REGISTER

ANAHEIM – The city outlined a $75-million plan on Friday to pave the way for the NBA's Sacramento Kings to move into the Honda Center.

Under the agreement, scheduled for a vote at Tuesday's City Council meeting, Anaheim would provide $75 million in lease-revenue bonds: $25 million for construction upgrades to the Honda Center, and $50 million in working capital, possibly for the Kings' relocation costs.

The bonds, funded by private investors, would be paid back over 10 years by revenues from the city-owned Honda Center.

"In the event that the Honda Center's revenues are not sufficient to pay the interest and principal on the bonds, then the private investors have taken on all risk of non-payment," Finance Director Bob Wingenroth writes in a council staff report.

The Kings have been in private negotiations with Anaheim Arena Management, which operates the Honda Center. Kings owners Joe and Gavin Maloof have until April 18 to file for relocation with the NBA.

The council actions are the first official acknowledgement that steps are being taken to bring the Kings here for the 2011-12 season.

"It is no secret that Anaheim is one of Southern California's most exciting sports and entertainment destinations," Mayor Tom Tait said in a statement Friday. "With more than three million people in Orange County, the addition of an NBA team is a great move that promises to be a successful venture."

Attorneys for Kings' owners earlier this month filed for trademarks on several names, including the Anaheim Royals; the franchise was originally the Rochester Royals.

Also on Tuesday's agenda is a document that reiterates that any NBA team must include Anaheim first and as the only geographic identifier in its name – preventing a potential Anaheim Royals of Southern California scenario.

A few years ago, the city amended its agreement with Anaheim Arena Management after the Anaheim Angels baseball team unexpectedly changed the team name to the Los Angeles Angels of Anaheim.

The 17,000-seat arena was built in 1993 and was intended for two major professional sports teams. Until now, the only prominent tenant has been the Anaheim Ducks hockey team.

The staff report doesn't spell out what upgrades would be constructed at the Honda Center, but in 2008 the city said that an NBA team would need locker rooms, a sports-training facility and a practice court. (A practice facility could be inside the arena or nearby.)

Under the current agreement, the city makes no money off the Honda Center until the annual profit reaches a $12-million threshold. At that point, Anaheim would receive 15 percent of revenues.

If the Kings move here, city officials expect revenues to exceed the $12-million mark. But as part of the new agreement, Anaheim would delay its share of those profits until the bonds are paid off. Anaheim Arena Management's contract to operate the Honda Center also would be extended 10 years to 2033.

The entire financing deal is contingent upon the Kings' owners signing a deal to come to Anaheim and winning NBA approval.

City officials, in the long run, believe having an NBA team would be a financial boon to Anaheim.

The city staff report cites a 2008 study by economist Lon Hatamiya that says the Seattle SuperSonics contributed $188 million annually to the local economy before moving to Oklahoma City.

"As mayor, I look forward to joining my colleagues on Tuesday to consider these important agenda items," Tait said. "As a basketball fan, I'm hoping that we will soon be cheering at that first tip-off at Anaheim's own Honda Center."

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